Motorcar Parts Of America Inc 10-Q for FY2026 Q1

Motorcar Parts Of America Inc (MPAA)

10-Q 2025-08-11 For: 2025-06-30

Added on April 05, 2026

About this 10-Q

Motorcar Parts Of America Inc filed this 10-Q on August 11, 2025, covering the quarter ended June 30, 2025 (FY2026 Q1).

Headline figures

Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $188.36M; up 10.9% from $169.89M a year earlier
Net income: $3.04M; compared with a net loss of $18.09M a year earlier
Diluted EPS: $0.15; compared with -$0.92 a year earlier

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New York		11-2153962
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


2929 California Street, Torrance, California		90503
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MPAA	The Nasdaq Global Select Market


Large accelerated filer ☐	Accelerated filer ☑
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐


PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4. Controls and Procedures	34
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings	36
	Item 1A. Risk Factors	36
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 3. Defaults Upon Senior Securities	36
	Item 5. Other Information	37
	Item 6. Exhibits	38
	SIGNATURES	41


		June 30, 2025		March 31, 2025
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	12,479,000	$	9,429,000
Short-term investments		2,011,000		1,881,000
Accounts receivable — net		85,532,000		91,064,000
Inventory — net		366,772,000		359,669,000
Contract assets		30,329,000		29,606,000
Prepaid expenses and other current assets		22,259,000		19,822,000
Total current assets		519,382,000		511,471,000
Plant and equipment — net		33,194,000		31,990,000
Operating lease assets		68,281,000		66,603,000
Long-term deferred income taxes		5,504,000		4,569,000
Long-term contract assets		340,529,000		336,268,000
Goodwill and intangible assets — net		3,693,000		3,757,000
Other assets		2,767,000		2,978,000
TOTAL ASSETS	$	973,350,000	$	957,636,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	176,269,000	$	172,117,000
Customer finished goods returns accrual		32,926,000		34,411,000
Contract liabilities		49,396,000		38,158,000
Revolving loan		86,856,000		90,787,000
Other current liabilities		4,973,000		5,570,000
Operating lease liabilities		10,196,000		9,982,000
Total current liabilities		360,616,000		351,025,000
Convertible notes, related party		40,844,000		35,207,000
Long-term contract liabilities		240,021,000		241,404,000
Long-term deferred income taxes		488,000		362,000
Long-term operating lease liabilities		63,056,000		65,308,000
Other liabilities		8,212,000		6,631,000
Total liabilities		713,237,000		699,937,000
Commitments and contingencies
Shareholders' equity:
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued		-		-
Series A junior participating preferred stock; par value $.01 per share,20,000 shares authorized; none issued		-		-
Common stock; par value $.01 per share, 50,000,000 shares authorized;19,352,135 and 19,435,706 shares issued and outstanding at June 30, 2025 and March 31, 2025, respectively		194,000		194,000
Additional paid-in capital		232,897,000		234,413,000
Retained earnings		23,075,000		20,033,000
Accumulated other comprehensive income		3,947,000		3,059,000
Total shareholders' equity		260,113,000		257,699,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	973,350,000	$	957,636,000


	Three Months Ended June 30,
		2025			2024

Net sales	$	188,364,000		$	169,887,000
Cost of goods sold		154,447,000			140,713,000
Gross profit		33,917,000			29,174,000
Operating expenses:
General and administrative		12,680,000			16,670,000
Sales and marketing		6,210,000			5,449,000
Research and development		3,306,000			2,433,000
Foreign exchange impact of lease liabilities and forward contracts		(8,348,000	)		11,078,000
Total operating expenses		13,848,000			35,630,000
Operating income (loss)		20,069,000			(6,456,000	)
Other expenses:
Interest expense, net		12,812,000			14,387,000
Change in fair value of compound net derivative liability		1,790,000			(2,580,000	)
Total other expenses		14,602,000			11,807,000
Income (loss) before income tax expense (benefit)		5,467,000			(18,263,000	)
Income tax expense (benefit)		2,425,000			(178,000	)
Net income (loss)	$	3,042,000		$	(18,085,000	)
Basic net income (loss) per share	$	0.16		$	(0.92	)
Diluted net income (loss) per share	$	0.15		$	(0.92	)
Weighted average number of shares outstanding:
Basic		19,369,060			19,674,539
Diluted		19,917,663			19,674,539


		Three Months Ended June 30,
		2025		2024
Net income (loss)	$	3,042,000	$	(18,085,000	)
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)		888,000		(675,000	)
Total other comprehensive income (loss), net of tax		888,000		(675,000	)
Comprehensive income (loss)	$	3,930,000	$	(18,760,000	)


	Common Stock
		Shares			Amount			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total

Balance at March 31, 2025		19,435,706		$	194,000		$	234,413,000		$	20,033,000	$	3,059,000	$	257,699,000
Share-based compensation expense		-			-			946,000			-		-		946,000
Issuance of common stock upon vesting of RSUs and PSUs, net of shares withheld for employee taxes		114,225			2,000			(498,000	)		-		-		(496,000	)
Repurchase and cancellation of common stock, including fees		(197,796	)		(2,000	)		(1,964,000	)		-		-		(1,966,000	)
Foreign currency translation		-			-			-			-		888,000		888000
Net income		-			-			-			3,042,000		-		3,042,000
Balance at June 30, 2025		19,352,135		$	194,000		$	232,897,000		$	23,075,000	$	3,947,000	$	260,113,000


	Three Months Ended
	June 30,
		2025			2024
Cash flows from operating activities:
Net income (loss)	$	3,042,000		$	(18,085,000	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		2,449,000			2,729,000
Amortization of debt issuance costs		590,000			537,000
Amortization of interest on contract liabilities		162,000			203,000
Accrued interest on convertible notes, related party		968,000			880,000
Amortization of core premiums paid to customers		2,621,000			2,471,000
Amortization of finished goods premiums paid to customers		226,000			257,000
Noncash lease expense		2,435,000			2,608,000
Foreign exchange impact of lease liabilities and forward contracts		(8,348,000	)		11,078,000
Change in fair value of compound net derivative liability		1,790,000			(2,580,000	)
Gain on short-term investments		(131,000	)		(28,000	)
Net provision for inventory reserves		2,084,000			3,184,000
Net provision for customer payment discrepancies and credit losses		401,000			34,000
Deferred income taxes		(339,000	)		(1,862,000	)
Share-based compensation expense		946,000			1,000,000
Loss on disposal of plant and equipment		17,000			-
Changes in operating assets and liabilities:
Accounts receivable		5,994,000			17,207,000
Inventory		(8,046,000	)		(9,061,000	)
Prepaid expenses and other current assets		725,000			(1,232,000	)
Other assets		394,000			(785,000	)
Accounts payable and accrued liabilities		4,013,000			(20,367,000	)
Customer finished goods returns accrual		(1,551,000	)		(9,275,000	)
Contract assets		(7,499,000	)		1,482,000
Contract liabilities		9,359,000			2,089,000
Operating lease liabilities		(2,484,000	)		(2,162,000	)
Other liabilities		210,000			(1,163,000	)
Net cash provided by (used in) operating activities		10,028,000			(20,841,000	)
Cash flows from investing activities:
Purchase of plant and equipment		(807,000	)		(490,000	)
Redemption of short-term investments		1,000			(22,000	)
Net cash used in investing activities		(806,000	)		(512,000	)
Cash flows from financing activities:
Borrowings under revolving loan		188,676,000			42,366,000
Repayments of revolving loan		(192,607,000	)		(26,532,000	)
Payments for debt issuance costs		-			(15,000	)
Payments on finance lease obligations		(385,000	)		(472,000	)
Cash used to net share settle equity awards		(496,000	)		(181,000	)
Repurchase of common stock, including fees		(1,966,000	)		-
Net cash (used in) provided by financing activities		(6,778,000	)		15,166,000
Effect of exchange rate changes on cash and cash equivalents		606,000			(256,000	)
Net increase (decrease) in cash and cash equivalents		3,050,000			(6,443,000	)
Cash and cash equivalents — Beginning of period		9,429,000			13,974,000
Cash and cash equivalents — End of period	$	12,479,000		$	7,531,000
Supplemental disclosures of cash flow information:
Cash paid for interest, net	$	11,154,000		$	12,689,000
Cash paid for income taxes, net of refunds		550,000			2,196,000
Cash paid for operating leases		3,688,000			3,355,000
Cash paid for finance leases		459,000			523,000
Plant and equipment acquired under finance leases		1,788,000			-
Assets acquired under operating leases		198,000			1,815,000
Non-cash capital expenditures		192,000			19,000


		June 30, 2025			March 31, 2025
Accounts receivable - net
Accounts receivable — trade	$	109,041,000		$	113,807,000
Allowance for credit losses		(264,000	)		(207,000	)
Customer payment discrepancies		(2,015,000	)		(1,765,000	)
Customer returns RGA issued		(21,230,000	)		(20,771,000	)
Total accounts receivable — net	$	85,532,000		$	91,064,000


		June 30, 2025		March 31, 2025
Short-term contract assets
Cores expected to be returned by customers	$	18,151,000	$	17,732,000
Core premiums paid to customers		9,981,000		9,669,000
Upfront payments to customers		1,350,000		1,400,000
Finished goods premiums paid to customers		847,000		805,000
Total short-term contract assets	$	30,329,000	$	29,606,000
Long-term contract assets
Remanufactured cores held at customers' locations	$	305,398,000	$	301,388,000
Core premiums paid to customers		25,131,000		24,714,000
Long-term core inventory deposits		5,569,000		5,569,000
Finished goods premiums paid to customers		2,627,000		2,483,000
Upfront payments to customers		1,804,000		2,114,000
Total long-term contract assets	$	340,529,000	$	336,268,000


	June 30, 2025		March 31, 2025
Accounts receivable - trade
Customer A	48	%	41	%
Customer B	23	%	26	%
Customer C	-	%	7	%


		June 30, 2025		March 31, 2025
Short-term contract liabilities
Customer allowances earned	$	17,814,000	$	16,283,000
Customer core returns accruals		14,826,000		13,880,000
Core bank liability		11,399,000		1,795,000
Accrued core payment		3,117,000		3,196,000
Customer deposits		2,137,000		2,486,000
Finished goods liabilities		103,000		518,000
Total short-term contract liabilities	$	49,396,000	$	38,158,000
Long-term contract liabilities
Customer core returns accruals	$	236,875,000	$	227,588,000
Accrued core payment		3,146,000		3,768,000
Core bank liability		-		10,048,000
Total long-term contract liabilities	$	240,021,000	$	241,404,000


Leases	Classification		June 30,2025	March 31, 2025
Assets:
Operating	Operating lease assets	$	68,281,000	$	66,603,000
Finance	Plant and equipment		5,309,000		4,296,000
Total leased assets		$	73,590,000	$	70,899,000

Liabilities:
Current
Operating	Operating lease liabilities	$	10,196,000	$	9,982,000
Finance	Other current liabilities		1,321,000		1,222,000
Long-term
Operating	Long-term operating lease liabilities		63,056,000		65,308,000
Finance	Other liabilities		3,268,000		1,954,000
Total lease liabilities		$	77,841,000	$	78,466,000


		June 30, 2025			March 31, 2025
Inventory — net
Raw materials	$	154,325,000		$	150,274,000
Work-in-process		8,917,000			7,821,000
Finished goods		204,604,000			202,078,000
		367,846,000			360,173,000
Less allowance for excess and obsolete inventory		(19,566,000	)		(18,964,000	)
Inventory		348,280,000			341,209,000
Inventory unreturned		18,492,000			18,460,000
Total inventory — net	$	366,772,000		$	359,669,000


	Three Months Ended June 30,
		2025		2024
Product line
Rotating electrical products		66	%	65	%
Brake-related products		23	%	24	%
Wheel hub products		6	%	7	%
Other products		5	%	4	%
		100	%	100	%


		June 30, 2025			March 31, 2025
Convertible Notes, related party
Principal amount of Convertible Notes	$	38,730,000		$	35,209,000
Less: unamortized debt discount attributed to Compound Net Derivative Liability		(6,271,000	)		(6,556,000	)
Less: unamortized debt discount attributed to debt issuance costs		(875,000	)		(916,000	)
Carrying amount of the Convertible Notes		31,584,000			27,737,000
Plus: Compound Net Derivative Liability		9,260,000			7,470,000
Net carrying amount of Convertible Notes, related party	$	40,844,000		$	35,207,000

Maturity of lease liabilities by fiscal year		Operating Leases			Finance Leases			Total
2026- remaining nine months	$	10,643,000		$	1,279,000		$	11,922,000
2027		12,331,000			1,304,000			13,635,000
2028		11,672,000			1,049,000			12,721,000
2029		11,179,000			818,000			11,997,000
2030		11,378,000			740,000			12,118,000
Thereafter		32,135,000			92,000			32,227,000
Total lease payments		89,338,000			5,282,000			94,620,000
Less amount representing interest		(16,086,000	)		(693,000	)		(16,779,000	)
Present value of lease liabilities	$	73,252,000		$	4,589,000		$	77,841,000

	June 30, 2025		March 31, 2025
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases	4.0		3.2
Operating leases	7.1		7.3
Weighted-average discount rate:
Finance leases	7.1	%	7.0	%
Operating leases	5.8	%	5.8	%


		Foreign Exchange Impact of Lease Liabilities and Forward Contracts
		Three Months Ended
Derivatives Not Designated as		June 30,
Hedging Instruments		2025		2024
Gain (loss) from forward foreign currency exchange contracts	$	4,346,000	$	(5,369,000	)




			June 30, 2025								March 31, 2025
			Fair Value Measurements								Fair Value Measurements
			Using Inputs Considered as								Using Inputs Considered as
		Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	2,011,000	$	2,011,000	$	-	$	-	$	1,881,000	$	1,881,000	$	-	$	-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		2,683,000		-		2,683,000		-		-		-		-		-

Liabilities
Other current liabilities
Deferred compensation		2,011,000		2,011,000		-		-		1,881,000		1,881,000		-		-
Forward foreign currency exchange contracts		-		-		-		-		1,663,000		-		1,663,000		-
Convertible notes, related party Compound Net Derivative Liability		9,260,000		-		-		9,260,000		7,470,000		-		-		7,470,000


	June 30, 2025		March 31, 2025
Risk free interest rate	3.70	%	3.91	%
Cost of equity	21.40	%	21.30	%
Weighted average cost of capital	15.60	%	14.90	%
Expected volatility of the Company's common stock	47.50	%	40.00	%
EBITDA volatility	35.00	%	45.00	%


	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2025	1,053,561		$	20.20
Forfeited/Cancelled	(4,220	)	$	22.64
Outstanding at June 30, 2025	1,049,341		$	20.20


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2025	505,373		$	7.26
Granted	428,552		$	9.76
Vested	(121,364	)	$	9.49
Forfeited/Cancelled	(580	)	$	7.73
Outstanding at June 30, 2025	811,981		$	8.25


	Three Months Ended June 30,
		2025			2024
Risk free interest rate		3.86	%		4.45	%
Expected life in years		0.7-3.0			3
Expected volatility of the Company's common stock		66.80	%		59.80	%
Average correlation coefficient of peer companies		15.70	%		16.50	%
Expected dividend yield		-			-
Grant date fair value	$	7.33-12.68		$	8.65


	Three Months Ended
	June 30,
		2025			2024

Net sales to external customers for Hard Parts reportable segment	$	174,889,000		$	158,187,000
Intersegment sales for Hard Parts reportable segment		258,000			32,000
Total net sales for Hard Parts reportable segment		175,147,000			158,219,000

Reconciliation of net sales
Other net sales (1)		13,475,000			11,700,000
Elimination of intersegment net sales		(258,000	)		(32,000	)
Total consolidated net sales	$	188,364,000		$	169,887,000

Less (2):
Material, labor, and overhead expenses		113,895,000			109,217,000
Logistic expenses (3)		30,665,000			22,778,000
Revaluation of cores on customers' shelves		1,026,000			394,000
Foreign exchange impact of lease liabilities and forward contracts		(8,348,000	)		11,078,000
Other segment items (4)		19,477,000			21,211,000
Total operating income (loss) for Hard Parts reportable segment	$	18,432,000		$	(6,459,000	)

Reconciliation of profit (loss)
Other operating income (loss) (1)		1,633,000			(6,000	)
Elimination of intersegment operating income		4,000			9,000
Interest expense, net		(12,812,000	)		(14,387,000	)
Change in fair value of compound net derivative liability		(1,790,000	)		2,580,000
Total consolidated income (loss) before income tax expense (benefit)	$	5,467,000		$	(18,263,000	)

Reconciliations of other significant items and assets:

Depreciation and amortization
Depreciation and amortization for Hard Parts reportable segment (5)	$	2,232,000		$	2,525,000
Other depreciation and amortization (1)		217,000			204,000
Total consolidated depreciation and amortization	$	2,449,000		$	2,729,000

Capital Expenditures
Captial expenditures for Hard Parts reportable segment	$	394,000		$	253,000
Other capital expenditures (1)		413,000			237,000
Total consolidated capital expenditures	$	807,000		$	490,000


Periods	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)

April 1 - April 30, 2025:
Open market and privately negotiated purchases	-	$	-	$	-	$	13,423,000
May 1 - May 31, 2025:
Open market and privately negotiated purchases	98,671	$	9.73		960,000		12,463,000
June 1 - June 30, 2025:
Open market and privately negotiated purchases	99,125	$	10.15		1,006,000		11,457,000
Total	197,796			$	1,966,000	$	11,457,000


Number	Description of Exhibit	Method of Filing
3.1	Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
3.2	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No. 33-97498) declared effective on November 14, 1995.
3.3	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997.
3.4	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”).
3.5	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit C to the Company’s proxy statement on Schedule 14A filed with the SEC on November 25, 2003.
3.6	Amended and Restated By-Laws of Motorcar Parts of America, Inc.	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 24, 2010.
3.7	Certificate of Amendment of the Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on April 17, 2014.
3.8	Amended and Restated By-Laws of Motorcar Parts of America, Inc., as amended on February 4, 2016	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 10, 2016.
3.9	Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on June 9, 2016	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on June 14, 2016.
3.10	Amendment to the Amended and Restated By-Laws of the Company	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 22, 2017.
3.11	Third Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on January 26, 2022	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 1, 2022.
4.1	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934	Incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed on August 9, 2022.
4.2	2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on December 15, 2010.


	MOTORCAR PARTS OF AMERICA, INC.

Dated: August 11, 2025	By:	/s/ David Lee
		David Lee
		Chief Financial Officer

Dated: August 11, 2025	By:	/s/ Kamlesh Shah
		Kamlesh Shah
		Chief Accounting Officer


Date: August 11, 2025	/s/ Selwyn Joffe
	Selwyn Joffe
	Chief Executive Officer